Senate rejects Coburn bill to repeal ethanol subsidies

WASHINGTON – By a vote of 59-40, the Senate on Tuesday afternoon struck down a measure to roll back $6 billion in federal ethanol subsidies.

S.1057, dubbed the “Ethanol Subsidy and Tariff Repeal Act,” would have repealed a 45-cents per gallon tax credit for ethanol blended into gasoline as well as a 54-cent tariff on imported ethanol. The controversial ethanol credit is hailed by proponents as a boost to domestic energy production and rejected by opponents as a gratuitous giveaway.

Twenty-five Democrats joined 34 Republicans to defeat the bill, which was forced to a vote by Sen. Tom Coburn (R-OK), as an amendment to the Economic Development Revitalization Act.

The vote caused some friction within the conservative movement. The billionaire Koch brothers backed the Coburn amendment, citing free-market principles and opposition to federal subsidies. But conservative activist Grover Norquist decried it as an effective tax increase, something he and his group American For Tax Reform virulently oppose.

The debate over ethanol subsidies on Capitol Hill is heavily colored by the fact that Iowa, a major beneficiary of the policy, holds the first primary test for presidential contenders. It’s also complicated because farm-state senators such as Chuck Grassley (R-IA) and Dick Durbin (D-IL) are motivated by local politics to support them.